AM Comments January 23 2025
Good morning. Mostly quiet trade in the ag space to start Thursday, as corn and soybeans are taking a bit of a breather from the back-and-forth gyrations of the past couple sessions. As we've mentioned recently, rally efforts from here are likely to become significantly more labored in the days and weeks ahead, as the weather concern in Argentina is being priced in and the charts reach overbought levels. Keep in mind that in Brazil, even if soy production drops to 163 mmt's (down ~10 mmt's from some private estimates), it would still be a new all time record. For this reason, we would caution against being overly bullish flat price at this point based strictly on perceived losses in South America, as the market has priced a lot of this in. Corn futures this morning are trading around a penny higher, soybean futures are trading 2-4 cents higher, and the Chicago wheat market is down 1-2 cents. Products are mixed, soybean meal is up around $1-2/ton, and soybean oil is down 5-10 points. Outside markets are mixed, crude oil futures are up 20-30 cents/bbl, the Dow Jones index is up 30 points and the US$ index is up 15 points. The S&P500 is down 10 points and the NASDAQ is down 120 points.
Today's Reports: Weekly Jobless Claims; EIA Weekly Ethanol Production/Energy Stocks
- This morning's weekly ethanol production report for the week ending January 17th is expected to show daily production in the week in a range of 1.074-1.097 mil bbls, while stocks are estimated in a range of 24.808-25.500 mil bbls; if realized, this would be the highest stocks level since April of last year.
- The regular weekly export sales report for corn, beans, and wheat, usually out on Thursday mornings, will be released tomorrow this week due to Monday's MLK holiday.
- Brazil's Ag Ministry on Wednesday issued a statement regarding the suspension of soybean shipments to China from 5 companies, saying that they did not expect the development to impact overall trading volumes in the country, and also said they would be requesting a lift of the suspension as soon as the issues are resolved.
- President Trump's nominee to head the USDA, Brooke Rollins, is set to appear before the Senate Agriculture Committee on Thursday for her nomination hearing. The former CEO of the Renewable Fuels Association, an ethanol trade group, has in the past been critical of the ethanol industry, saying increased production of the product led to higher food and fuel costs, and did not cut greenhouse gas emissions.
- From a technical standpoint, both spot corn and soybean futures are beginning to reach overbought territory, with the RSI (relative strength index) on both contracts having approached the key 70.0 level in recent days. The indicator would argue for limited further upside in prices, with corn futures only exceeding this level three times in the past year; similarly, soybean futures have not eclipsed the 70.0 mark in the past year, and have only approached it a handful of times.
- There was little new tariff talk overnight from Trump or his team, with his efforts today being focused on the World Economic Forum in Davos, Switzerland, where is he scheduled to give a virtual address at 10am central time this morning. Among others, the CEOs of both Blackstone and Bank of America will be part of those asking questions to the President.
- US Midwest temps will be a bit of a mixed bag the rest of the week and through the weekend, though it would appear the extreme cold seen over the past several days is on its way out. Highs will remain in the single digits today in parts of ND and MN, but look to get back into the teens/twenties by early next week, and then will be seen average to just slightly below average for a few days before increasing to above average for most of the country by the end of next week.
- Snowfall data shows slightly larger accumulations in the northern Plains and northern Corn Belt over the past 24 hours than were forecast yesterday morning, with parts of northern MN/WI picking up 2-4". The winter storm in the southeast also continued putting down snow over the past 24 hours, with a small pocket of southeast GA seeing upwards of 6".
- As we've mentioned all week, the presence of upper atmosphere flow running west to east generally along the US/Canada border will keep weather patters in these areas active through the weekend and into next week. Lake effect snow will remain common on the eastern side of the Great Lakes, while exact locations/amounts further to the south will be hard to predict. Otherwise, the southeast sees a few dry days until Sunday, before rains are expected to pick up again through next week.
- Week-two precip outlooks have again trended wetter overnight, with both the CPC and the EU's AI model showing a significantly wetter than normal outlook for nearly the entire eastern half of the country through the first week of February. The PNW also looks to stay west, while the southwest continues to see below average precip chances.
- Satellite data in South America this morning shows further scattered rains continued to impact northern and north-central Argentina over the last 24 hours, with totals ranging from trace amounts to less than a half inch generally. Brazil saw rains of 0.5-1", but coverage was similar to Argentina in being rather scattered; better/more normal rains continued to fall in northern and northwest Brazil.
- Through the weekend, more of the same is expected as models have actually continued to add rains further to the south in Argentina over the next week, while also continuing to keep moisture present in southern and south-central Brazil. The week two forecast remains dry, but all focus in the short-term will be on expected rains between now and next Thursday.